Problems with payday lending
There are widespread community concerns about payday lending. In-depth research summarised the problems as follows:
* Payday lenders may charge high rates with effective interest charges as high as 1300% per annum.
* Payday lenders’ clients are generally low-income consumers.
* The rolling over of payday loans leads to a rapidly growing debt that consumers may find difficult to repay.
* Lenders who require direct debit as a form of payment guarantee have priority access to the income of consumers, leaving them exposed to other financial difficulties.